Thursday, May 31, 2012

This willingness to relocate is a large factor in America's prosperity, and it always has been. Today, about half of American households change addresses every five years, a number that would be unthinkable in Europe, and a significant number relocate to a different city. About 33% of Americans reside in a state other than the one they were born in, up from 20% in 1900.

This staggering degree of mobility has both positive and negative effects. On the one hand, moving has social and personal costs. Compared with Europeans, Americans tend to live farther from their parents and siblings. They are less attached to their neighborhoods and less familiar with their neighbors. But there are also advantages to mobility: If the economic conditions in a region aren't particularly good, Americans tend to look for better opportunities somewhere else. By contrast, Italians and other Europeans tend to stay put. They give up career opportunities and higher salaries to be close to their parents and friends.

Among Americans, however, there are large differences, with some groups much more willing to move than others. At the time of the Great Migration in the 1920s—when more than two million African-Americans abandoned the South for industrial centers in other regions—less-educated individuals were more likely to migrate in search of better lives. Today, the opposite is true: The more education a person has, the more mobile he or she is. College graduates have the highest mobility of all, workers with a community-college education are less mobile, high-school graduates are even less and dropouts are the least mobile of all.

Emphasis added. The inertia of Europeans, particularly Italians, is remarkable. More people graduating from university aren't overriding the dominant cultural disposition. Becoming better educated doesn't matter as much as it does in the United States. Why? People develop, not places.

The key mechanism at work here is the city itself. Dense and interactive connectors, cities are economic and social organizing machines. They bring people and ideas together, providing the platform for them to combine and recombine in myriad ways, spurring both artistic and cultural creativity and technological innovation, entrepreneurship, and economic growth.

This is what Jane Jacobs taught us long ago in her book The Economy of Cities. This is what the Nobel Prize winning economist Robert Lucas meant when he formalized Jacob’s argument into a theory of "human capital externalities" that stem from the dense clustering of people in cities as the basic mechanism of economic growth. Cities themselves power economic progress, driving artistic, technological, and overall economic growth at one and the same time.

It’s always been that way, as detailed archaeological and anthropological studies show. Stephen Shennan at University College London, for example, looked at the sudden spikes of artistic and technological progress that occurred in Europe, Africa, and the Middle East throughout prehistory and concluded that what they all had in common was the growth of local population densities.

Emphasis added. That's a powerful argument. It's also wrong. The very act of moving to a city powers economic progress. Greater density will not help the diffusion of ideas and culture. Very dense neighborhoods with low geographic mobility (i.e. churn) tend to be poor, not rich. If Florida was right, the relative lack of geographic mobility in Italy wouldn't matter.

So what’s going on? A mixture of powerful economic phenomena are boosting the value of living around other college graduates. Young educated workers will change jobs numerous times over their careers, which makes living in a large, “thick” labor market with diverse opportunities more appealing. The same force leads an increasing number of educated two-earner couples to these same sorts of large metro areas. Living in a highly educated metro area boosts one’s own acquisition of human capital and earning power, and leads to better employment outcomes for workers across the education spectrum.

Like Florida, Berube is standing on firm research ground (see links in above quoted passage). Without migration, there are benefits from a college degree. With migration, there are benefits from leaving a weak job market for a strong job market. I'm interested in isolating the effects (i.e. benefits) from simply relocating. In other words, even moving to a weaker job market would be worthwhile. The bottom line would be increasing geographic mobility, which pushes beyond the boundary of Enrico Moretti's analysis.

Monday, May 28, 2012

I think virtually every city that’s lately experienced a boost in immigration has experienced the potential for a renaissance that they may not recognize because immigrants tend to be far more entrepreneurial than other residents, in terms of everything from starting new restaurants and stores to running other businesses. Particularly when you’re looking at an infusion of immigrants into a place where there’s otherwise been a population exodus – the Rust Belt area, for example — and notably in places that have also been regions of backlash against immigration, such as Hazleton, Pennsylvania. These areas have failed to recognize the potential renaissance in their communities [due to] immigrants.

Despite the backlash against immigration, entrepreneurs are migrating to Hazleton. If we make our city cooler, more migrants will come. If we are more tolerant, then people from all over the world will repopulate our demographically challenged community. The curse of the Underpants Gnomes continues to haunt us. Where's the evidence that this stuff works?

Latinos are moving to Rust Belt cities regardless of policy and feel-good initiatives. Who is mayor doesn't matter. Schenectady, NY and Reading, PA are experiencing a population boom. That wave is moving westward, already evident in Pittsburgh. Hazleton's population grew between 2000 and 2010 by 8.6%. The jump in the Hispanic population was remarkable and dramatic, as it was for the entire state:

Overall, Pennsylvania grew by 3.4% to 12,702,379, driven by large gains in the Hispanic population and steady growth of the Asian population, says William Frey, a demographer at the Brookings Institution. Hispanics account for 77% of the state's growth.

Those increases and a 12.5% gain in African Americans offset a 0.7% drop in non-Hispanic whites.

The decline in non-Hispanic white people is caused primarily by two things: a birth rate about half that of Hispanics and outmigration, says Gordon DeJong, professor of sociology and demography at Penn State University.

Emphasis added. Did the welcome center promote fertility? Were there incentives to have more babies? Concerning the boost in numbers, there is a lot left to the imagination.

Over the last few months, I've been researching immigrant attraction strategies across the entire United States. I focused on Latino migration and studied the flows in an attempt to unearth evidence that these policies were working. There are success stories. I also learned that talking about greater tolerance and cutting the ribbon on a new welcome center are more palatable to residents than actually increasing immigration. I'm not seeing a connection between community development and greater migration (international or domestic). However, we could get a lot more out the existing inmigration. I think if we did that, recognized the potential renaissance, that would attract more people.

Thursday, May 24, 2012

Addressing famine, there are two schools of thought. One is to deliver the food where it is needed. The other approach is to encourage people to move where the food is. You can apply that model to just about every policy controversy. Demography has not been kind to Atlantic Canada (same goes for the Rust Belt in the States). A response to the call to offer an incentive to leave:

Instead of an exodus, Atlantic Canada needs a population infusion. The region needs to attract tens of thousands of young workers (immigrants and migrants) over the next 20 years just to meet emerging labour market needs. In addition, the economies in the region need to grow to ensure they have the fiscal capacity to fund public services.

I agree. Domestically, moving to Alberta or Saskatchewan makes sense. Globally, funneling Canada's immigration to the population challenged is a smart move.

Make Halifax the gateway and encourage more internal geographic mobility. New Brunswick is short of immigrants. The Prairie Provinces command migrants. Don't cut off one leg to save the other.

Wednesday, May 23, 2012

The Mayor of the City of New York, Michael Bloomberg, has been a great champion for more immigration to the United States. Talent is the lifeblood of any metro's economy. His most recent call for meaningful reform isn't news. I agree with many of policy recommendations put forward. But there is a serious flaw in the theoretical framework used to frame the debate.

People develop, not places. Liberalizing the border would go a long way to achieving that end. Our obsession with territory clouds the picture of how migration promotes economic development. Pointing towards immigration as a solution for demographic challenges is a mistake.

One of our worst categories? International Talent or the percentage of metro population ages 25+ with a four year degree born outside the U.S. We're at #48 with a mere 6.8%. San Jose is #1 with a whopping 49.6% and Detroit, just for the sake of comparison, is ranked 19th with 14.8%.

"GlobalPittsburgh is very excited about this opportunity to partner with the U.S. Commercial Service to help attract international students to the Greater Pittsburgh Region," said Harry Edelman, Vice-Chair of the GlobalPittsburgh Board of Directors on behalf of Board Chair Giselle Leonardo and the entire GlobalPittsburgh Board of Directors. "I know from my own experience that there is great interest among students around the world to study in Pittsburgh, and we know that there are profound economic and cultural benefits associated with exporting the region's outstanding educational assets." ...

... The partnership is part of the National Exporters Initiative (NEI). In 2010, President Obama announced the NEI with the goal of doubling U.S. exports by the end of 2014. The partnership supports this goal by educating U.S. exporters about the benefits of exporting and expanding their exports to additional markets, and the public and private sector resources to assist them.

Emphasis added. Simply put, more immigrants equals more exports. The economic impact is huge, even if the students don't stick around after graduation. You'll have trouble making this case if you have been playing the brain drain game. Residents will wonder why the population is still shrinking. That will erode support for the program. Xenophobes will have the upper hand. Economic development is put on the back burner once again.

"While we lose the kids, we gain the people aged 30 to 49 and a lot of these people coming into our rural communities are arriving with high levels of education, with earning power, with experience and with children," Winchester said. "It's counterintuitive."

The report notes that the "brain drain" of young people continues as people aged 18 to 25 leave home for college and broader horizons. But at the same time, the study found, almost all rural counties in Minnesota saw the number of people in their 30s and 40s rise above what would have been expected had no one moved in. This is a phenomenon Winchester has termed the "brain gain" because it represents people whose careers are in full swing and who bring skills and education to an area.

Rust Belt Chic leverages a person’s attachment to place to get them reinvested in that place. And no doubt, folks in the Rust Belt are attached: to their place and culture, to plain-spoken talk and mannerisms secured by red blood restraint, to blue-collar values and roots.

Rust Belt return migration is more pilgrimage than rational choice. This talent flow is hidden under population decline and sprawl. Using the same lens as Ben Winchester, we can see vitality returning to distressed rural or urban communities. Rust Belt Chic explains why people are moving back home, despite all the bad press and publicity. Often, economic refugees leave Big City out of empathy or guilt. They are the brain drain.

Apparently there have been a few Cleveland jokes told over the years: mostly lame jabs about inept sports teams or Rust Belt dreariness. We don't know about any of that. But we do know the city is dead serious about bikes, from Cannondale devotee LeBron James down to the devout commuters at the Cleveland Clinic.

People develop, not places. Freedom, income, health, and education are possessed by people. To say that a place is developing, by these definitions, is strictly a shorthand way of saying that these traits are improving for the people in that place. The same traits might improve to a greater degree, for the same people, in another place. This means that development does not fundamentally describe places, and that migration can be a route to development. Speaking of development for a country, village, or any other place has the perverse consequence of simply defining away the development that arises inherently from exercising the freedom to move.

Rust Belt and rural return migration are a testament to people developing, not places. But places can benefit from brain drain just as they do from talent attraction. We've documented that happening in Cleveland, Youngstown, and Pittsburgh. Yet little to nothing is done to leverage these talent flows. We intend to change that at Manufacturing Migration:

After decades of declining manufacturing employment in the United States, the bottom fell out thanks to the economic recessions in the early 1980s. That shock spawned a generation of Rust Belt refugees. Steel wasn’t coming back. Sun Belt jobs beckoned. We here at Manufacturing Migration do not see this exodus as a hallmark of failure, but a signature of resilience and innovation. Call it the Rust Belt Way.

Out of the latest downturn, Legacy Cities are carving new paths out of the ashes. The urban frontier, places of possibility and opportunity, are found in Pittsburgh and Cleveland, and such mythical geographies are pulling people in who go against the grain. Be it repatriates, folks priced out of New York, or risk-taking immigrants, our mission is to map this trend and make it more visible, with the intent to apply these lessons to the economic development of people, wherever they choose to live. After all, the Rust Belt Way is not tied to any particular geography, but rather speaks to the revitalization of any community, urban or rural.

Using the Rust Belt as a lens from which revitalization strategies are crafted is necessary. The region has served as a petri dish to grow ways of out of disinvestment for some time. Now it is time to culture this culture.

Sunday, May 20, 2012

Over the last few years, Pittsburgh has done well concerning a variety of economic metrics. Seems that each month the metro is setting a new record for labor force. Relatively speaking, the job creation is very impressive. So are the gains in per capita income. A sticking point has been overall economic growth. A different way to look at the "problem":

An interesting new paper by Enrico Moretti and Per Thulin estimates the employment multiplier on job growth in different industries and finds that in America, a new job in the manufacturing sector of a city corresponds to an addition of 1.6 jobs in its non-tradable industries (things like eateries, education and health services, salons, landscaping, and so on). For high-tech employment the multiplier is much higher, however; 5 jobs in non-tradable industries are generally created for each job in high tech. That seems a plausible relationship. Yet when we look at individual cities and regions, we see substantial variation. And what is particularly striking is just how limited the immediate employment impact of Silicon Valley's boom appears to be. From 2009 to 2010, the San Jose metropolitan area economy grew some 13% but employment in the metro area rose about 2%. The Houston metro area enjoyed job creation equally fast on much slower economic growth, of just 1.6%.

Emphasis added. There is something to be said for similar job growth with substantially less economic growth. Take a look at the most recent Brookings MetroMonitor report for Pittsburgh. The region ranks well in terms of job growth. The change in gross metropolitan product (GMP) is noticeably weaker. That would make more sense given the anemic population numbers.

The big picture still looks good. But if you consider the relationship between employment and GMP, then the image takes on a rosier hue. I see pressure for investment dollars to move from over-saturated Silicon Valley to under-appreciated Pittsburgh. Even in the glow of Facebook's IPO honeymoon, the Bay Area is dying.

So it was refreshing to discover a new start-up called DIY, which offers a do-it-yourself — or maker, in Valley jargon — community for children.

DIY is seeking to be like a Boy Scout troop for the modern day. Instead of teaching children how to tie a clove hitch that seems fit for teenagers in the 1920s, DIY, a Web site and mobile app, will encourage children to build things, document them with an iPhone or iPod, and then receive rewards for their work. ...

... Mr. Klein and Mr. Saxon said DIY was not just a clubhouse, either. Although they couldn’t share specifics, both men said the company was working with a major production company to make a feature-length movie. “The movie is about the characters from DIY, which will be a group of kids who save their small Rust Belt town through hacking, making and building,” Mr. Klein said.

Before I became a loyal Hoosier, I was born in Rochester, NY then raised in Buffalo for 8 years. Almost all of my extended family still lives in Erie and Wyoming counties

I’m torn between my hometown allegiances, but what I’ve recently realized is how similar a story of these Great Lake, Rust Belt cities share: The epic of a boom town built on the shoulders of immigrants, and the tragedy of its collapse when her canals were outpaced by railroads and industry and the swells of people flooding the country moved past them further out West.

These old bones — Buffalo, Cleveland, Detroit, Toledo and Fort Wayne — are still strong. I’m certain that the generation — we’re makers! — that inherited these places will weld something with the scraps.

Emphasis added. DIY Brooklyn is Rust Belt Chic. Little wonder why so many hipsters are attracted to Greenpoint. We are all workers. We're makers! Anyone from "here" understands it.

A generation of makers have made their marks outside of the Rust Belt. Now, they are moving back home to reclaim their heritage. Shrinking cities are finally ready for them. Meanwhile, suburban-reared intellectuals are crying foul. Return migrants are not natives. They didn't stay and stick out the tough times. They are not authentic urban dwellers, but posers exploiting the true residents. Locals only.

Who gets to claim a Rust Belt soul? There is an army of graduate students and professors who would like to check your papers and verify that you have callouses on your hands. If you wear glasses, then you are bourgeois. The cultural policing is nauseating.

The exodus from Detroit and Pittsburgh is not a symbol of the failure of capitalism. It is emblematic of its resounding success. If you could afford to leave Braddock for the suburban ideal, you left. The dramatic population decline is testament to how many people had the means to do so. The latest wave of globalization is transforming the urban core. Rust Belt refugees, for better or for worse, are leading the charge. You were brought up to work hard and adapt. You are not risk averse. You are driven to succeed.

Rust Belt Chic turns the stereotype (e.g. brain drain) on its head. Outmigration is a point of pride, not an admission of shame. The struggles of the generations before us are still fresh topics of conversation around the holiday table. Once or twice a year, we see how far our extended family has come. There is nothing ironic about learning to appreciate one's own culture, to celebrate one's identity. Still, we are caught between two places. We are Rust Belt transnationals. Nowhere is home.

These tours are part of an emerging niche tourist trade fuelled by kojo moe – “factory infatuation” – an enthusiasm that has taken root among young urbanites whose lives are increasingly remote from Japan’s manufacturing base. Apparently influenced by the popularity of glossy factory photography books published in the past decade, tourists and day-trippers now flock to appreciate the aesthetic charms of industrial installations – especially at night, when lights and flares add to their appeal.

In an illustration of what these enthusiasts are looking for, advertising for the Yokohama night trip includes among its top attractions a “large-scale iron mill”, a “captivating group of smokestacks” and a “intricate cluster of pipes”. ...

... In Europe, safely decommissioned mines and other industrial sites have already been rebranded as tourist attractions. Britain bristles with renovated mills and factories converted into art galleries, while Germany is energetically promoting its industrial heritage. One sprawling zone in the gritty Ruhr city of Duisburg has been transformed into a landscape park where visitors can scale concrete climbing walls or scuba dive in old gas tanks.

Enough about hipster intellectuals and their exploitative escapades. I'm interested in why people migrate and how they choose where to move. Rust Belt Chic appeals to young urbanites around the world. Pittsburgh is cooler than Portland. I have a vision of Japanese tourists invading the Carrie Furnace Works. I see vacant neighborhoods being repopulated.

Both shrinking and growing cities pose challenges. I don't understand the hand wringing over artists from Providence moving to Pittsburgh and gentrifying some North Side neighborhood. We are rediscovering the splendor of our legacy cities. So what if anarchists are squatting in a robber baron's mansion?

Hipsters are place whores. Slackers quickly moved on from Austin. By the time you heard about the scene and made the migration, they were gone. Meanwhile, Austin boomed. The same thing is going on in the Rust Belt. Which city will blossom? My money is on Pittsburgh. I could be wrong. Regardless, take advantage of the Rust Belt Chic trend. Don't bitch about it.

Encouraged by a federal program, Chinese and other foreign nationals are investing heavily in projects in the Pittsburgh region, including $71 million toward construction of UPMC East in Monroeville and $30 million toward the city's Bakery Square development in East Liberty.

The Immigrant Investor Program, known as EB-5, created by the Immigration Act of 1990, enables foreigners to invest private money in American projects in return for permission to live here and possible, but not guaranteed, interest on their investments.

UPMC's latest hospital, opening this summer, and the $110 million Bakery Square retail and office complex are among at least four developments that received or will receive millions in foreign dollars, said Lily Liqi Pietryka, managing director of Pittsburgh Regional Investment Center in Oakland, which finds foreigners interested in the program.

This kind of news tends to fly under the radar. Development good. Foreign investors bad. Don't excite the xenophobes. For the more opened minded (and pro economic development), check out this video:

How do you link capital heavy markets, such as China, with capital hungry companies here in the Pittsburgh region? Lily Liqi Pietryka, managing director for the Pittsburgh Regional Investment Center and Michael Matesic , president and CEO of the Idea Foundry unveil an innovative approach, using U.S. visas as the hook, to attract additional foreign capital into the region.

Despite all the moaning and groaning about brain drain, Boston is awash in young, college-educated talent. You can find the tale of the tape for the top-100 largest U.S. metros here. Almost 40% of Boston residents aged 18-34 hold at least a bachelor's degree. Pittsburgh is 12th with 29.81% and ahead of Chicago, Seattle, and Austin.

You can sort the rankings by both percentage and absolute numbers. NYC leaps to the top with almost 1.5 million young adults with a college degree. Number 2 is LA, roughly half the number you find in New York. Pittsburgh, Austin, Portland, and Columbus are grouped together. Since people vote with their feet, Pittsburgh is cooler than the other three cities.

The absolute number of college-educated young adults is a good proxy for urban hierarchy in the Talent Economy. This cohort is the most geographically mobile and the focus of most retention initiatives. How this population changes from year-to-year would be interesting to track. Just how fast is DC closing in on Chicago?

The list below shows the highest rates of minority populations among the 4 and under age group for the 50 most populous metro areas in the U.S. It should be re-emphasized that these are approximations of metro-level data based on single data from single counties, and are only intended to serve as a proxy for trying to understand how this nationwide shift to minority-majority young children plays out on a metro/city level.

“A lot of people aren’t aware that German is the largest ancestral group in the country,” said Don Heinrich Tolzmann, a Cincinnati author who wrote “The German-American Experience.” “It’s an eye-opener, and it’s something that’s commonly overlooked.” ...

... Pennsylvania has the largest population of German-Americans and is home to one of the group’s original settlements, Germantown in 1683. The state has 3.5 million people claiming German ancestry -- more than in Berlin. Allegheny County, which includes Pittsburgh, has 348,979 German-Americans, according to the census.

Thursday, May 17, 2012

In order to find a solution, first you must accurately define the problem. For brain drain, a popular measure is the percentage of the workforce sporting a college degree. On this score, Ohio is brain neutral. From the Federal Reserve Bank of Cleveland:

Ohio has increased its college attainment rates over time, but it has not improved its relative position among the states. This stability of rank is not found in all states. States such as Pennsylvania and Illinois have seen marked increases in their college attainment rates, both in absolute and relative terms, each improving by 15 places since 1980. Alternatively, certain Mountain and Southwestern states have seen their relative positions decline.

The proportion of individuals aged 25–54 with a BA who were born in Ohio but no longer reside in the state in 2010 is somewhat lower than the average exit rates of the rest the states—47.3 percent vs. 51.9 percent. (Educated people are quite mobile.) At the same time, only 29.8 percent of individuals with a BA who currently reside in Ohio were born in one of the other 49 states, Puerto Rico, or U.S. territories, compared to an average of 51.3 percent in the other states. It is not a brain drain story, per se. Instead, it is a lack of brain gain from outside the state. Now, this pattern is not limited to Ohio. In fact, it is common in states with low rates of population growth.

Emphasis added. States with low population growth are often tagged with the dreaded term of exodus. Everyone is fleeing the economic catastrophe. Gobs of cash are thrown about in an effort to retain talent. Policies are disconnected from data.

Ohio has a talent attraction problem. However, immigration to the state has bolstered college attainment rates. More from the Fed:

The bachelor’s degree (BA) attainment rate of individuals aged 25–34, not born in the United States but residing in Ohio in 2010 is substantially higher than the BA attainment rate of U.S. natives living in Ohio (46.9 percent vs. 28.2 percent). Foreign-born residents make up 6.5 percent of the 25–34 age group and 10.3 percent of those with a college degree in that group. In addition, foreign-born residents are particularly important in fields requiring academic backgrounds in science, technology, engineering, and math (STEM). As of 2010, they made up 21.3 percent of Ohio’s STEM workforce in the 25–34 cohort.

Simply put, Ohio needs to do a better job of enticing college graduates born in other states to move there. More immigration isn't the answer. Crying about retention doesn't help. (But it will get you funded or reelected.) Right now, the best thing going is return migration. Ask Youngstown.

Patterson sees parallels between Greenville and her hometown of Pittsburgh, which have “both been through some great revitalizations in the past, I would say, 10 to 15 years. It’s amazing to see pictures of Greenville before. … And a lot of people, when you say, ‘Pittsburgh,’ have that picture in their head of the old steel town, and smog. And it’s not like that anymore.”

Jamie Patterson is a trailing spouse. Her husband is from Upstate South Carolina. Now is a good time to move back home. Greenville is booming.

Luckily for her husband, Patterson gets Greenville. In every Rust Belt city I've visited, I feel at home. Portland, Austin, and even Denver don't excite me. You can have your Emerald City. I prefer Rust Belt Chic.

Tuesday, May 15, 2012

The momentum that fueled the city's boom years was essentially about large companies in established, old-line industries becoming larger. The industries of tomorrow -- in medicine, biotechnology, and the web -- so far haven't made Charlotte the next great place to land. And in this city of relentless self-improvement, the focus is on how to change that. Cheryl Richards is the dean of Northeastern University's new Charlotte campus, its first outside Boston, which opened last year as part of the scramble among universities to serve middle managers. She was part of a city delegation that visited Seattle to learn about development strategies for the new economy. The difference between the two cities, she says, is that "Seattle positions itself as growing talent. Charlotte positions itself as welcoming talent. We're importers of that talent."

Growing talent isn't easy or quick. Charlotte lacks an academic medical center, and the tech community is still oriented toward the needs of the big companies. The city and region's latest hopes for biotech are at the University of North Carolina at Charlotte's well-regarded bioinformatics department and in the next county over, at the North Carolina Research Campus, which was the brainchild of billionaire David Murdock. He has poured more than $500 million of his own money into the center, which focuses on nutrition and is built on the footprint of the sprawling textile company he once owned in Kannapolis. There's still a lot of empty space, but the goal is to create a research infrastructure -- a critical mass -- where none existed.

Emphasis added. Seattle imported a lot of its talent. It still does. The region is a national draw. In the Talent Economy, a metro can't rely on only attraction. The new winners will be the places that produce talent, such as Pittsburgh.

Charlotte has long symbolized all that is wrong with Pittsburgh and other Rust Belt cities. It boomed while Pittsburgh busted. Now Charlotte is chasing Pittsburgh's tail. Given the comments posted on my blog, I gather most people don't appreciate the irony. If the trend of Rust Belt talent moving back home accelerates, where does that leave Charlotte's nascent recovery? There are more questions for Charlotte than there are Fortune 500 company headquarters. At least the city is trying to answer them and is heading in the right direction. Right now, that strikes me as faint praise.

So is Boston in need of a hipness boost? Selkoe said the city has a reputation as “cold and conservative,’’ and if it doesn’t shake that rap it will lose more creative talent to New York and California.

In addition, a more vibrant innovation economy will help keep young companies here and convince college students to stick around after graduation.

Fostering growth of the Massachusetts creative economy is increasingly seen as a valuable way to help the state attract new companies and retain top talent, said F. Javier Torres, senior program officer at the Boston Foundation, a philanthropy that makes more than $80 million in grants every year, including to arts groups

“For generations, we’ve talked about the brain drain from Massachusetts and why students leave,’’ said Torres. Building up the area’s arts and cultural offerings, he said, helps blunt the exodus.

The Boston Foundation and other Massachusetts cultural organizations plan to launch MASSCreative this fall, an advocacy group supporting the state’s creative work force.

Emphasis added. Consultants, start your engines! Annually, $80 million dollars are sloshing around to help solve a problem that doesn't exist. The Boston Foundation doesn't care about benchmarking or data-driven analysis. The proof:

A state ranking conducted by the Information Technology and Innovation Foundation and the Kauffman Foundation, which focuses on entrepreneurship, shows Massachusetts pulling away from the pack in measures considered to be predictors of economic performance, called the New Economy Index. The state has occupied the top spot since the list was created in 1999. But in recent years since the health care law's implementation, its lead has grown. Massachusetts tops measures like migration of highly educated workers and the number of fast-growing businesses. 'They've gotten better compared to the nation since they put in their health care law,' says ITIF President Robert Atkinson.

Emphasis added. Wow, that sounds awful. Poor Massachusetts. MASSCreative should fix everything. The initiative is groundbreaking. The Boston Foundation is finally committed to stopping the talent exodus. The city is embracing urban cool. The Red Sox are poised to go on a record-breaking winning streak. Next up, waitstaff are forced to take sarcasm management classes in order to make Boston more welcoming to immigrants.

Sunday, May 13, 2012

[George Lucas], whose "Star Wars" films ushered in the digital arts age, withdrew his plans last month to build a large mission-style movie-making studio on Grady Ranch, blaming the Lucas Valley Estates Homeowners Association for being Nimbys and torpedoing it.

Several Lucas Valley Estates homeowners had, in fact, said that they considered the historic Lucas-owned farmland their back yards. They claimed the proposed 263,701-square-foot digital technology production complex was too large, would displace too much dirt, would change the course of a creek going through the area, create too much traffic and hadn't been studied enough.

In the letter withdrawing the plan, Lucas said he no longer believed he could maintain a constructive relationship with the neighbors and castigated Marin for being "a bedroom community" that is better suited for subdivisions instead of business. The letter said he would build the studio in another more welcoming community and "find a developer (for Grady Ranch) who will be interested in low-income housing since it is scarce in Marin."

For Sander de Block, the personal approach – and the genuine interest shown by Nova Scotia representatives – has won him over: “In most places, it stops with being wined and dined, getting a nice brochure, or a tax rebate,” he says. In Nova Scotia, he says, the conversation was also about fostering his company's innovation.

Emphasis added. The money tends to go to those initiatives you find in most places. A major theme in the success stories is the personal connection, networking. Sound strategies for landing a highly desirable job apply well to engineering talent migration. Where you go depends on who you know.

You don't always go where you know. Network or chain migration is instrumental in facilitating the exception to the geographic mobility rule. How else can Kitchener-Waterloo compete with Silicon Valley for talent? I'm betting that $10 million won't answer that question.

When I was in graduate school, before I came into contact with any of the research above, I created a simple model of arts-led gentrification to illustrate the specific case of a neighborhood lent a young, “hip” reputation by newly relocated artists. This model is different from others I’ve seen in a few ways. First, it casts neighborhood development as an iterative process, starting with tourism on the local level among artists. In other words, the people who are going to be checking out the happenings in a struggling outpost of the city are not, by and large, yuppies – they are other artists who are colleagues of the ones living in that neighborhood. Second, it emphasizes the role of bars and restaurants as attractors for other neighborhood visitors (including yuppies), whose viability is only made possible by the modest foot traffic generated by arts activities. And finally, it places at the beginning of the process not just arts activities, but specific kinds of arts activities: visible, storefront spaces like galleries and performance venues that signal the presence of art and draw visitors to a particular location.

"In the U.K. or the U.S. I couldn't have had this success and certainly not this quickly. I also couldn't have had this network—it just wouldn't have worked," Ms. Dagli says, explaining the year-and-a-half journey to build the company from scratch after returning from London. "The trend of young Turks returning home to seek opportunities here is going to grow as people now believe that they can make a sustainable fortune here away from the political and financial instability they were used to in the past. If you're a young Turk and you're not going to make it here, where are you going to make it?" she says.

Global cities are beacons for talent. People flock there from everywhere. Chicago is among the select few that has enjoyed this privilege. But in the Age of Return Migration, the tide has turned against it.

Turkey represents a trend, the flow of talent from developed markets (e.g. London) to developing markets (e.g. Istanbul). The same thing is going on domestically in the United States. Chicago's fresh blood is "repatriating". The brain circulation isn't new. The issue now is that these former skill feeders to Chicago are becoming attractive to talent from elsewhere. Chicago is no longer the only game in the Midwest. See upstart Indianapolis:

Well, I recently came across a blog post by Kelly Campbell, one of those cool people I'd never heard of, that presented her passionate case for pursuing global humanitarian efforts in Indy, using her grass roots example to show how. Kelly previously worked in the fashion industry in New York, and now runs The Village Experience and writes for the Blue Vine Collective (She was also one of the IBJ's 40 Under 40 last year, and you can read more about her over at the IBJ). Kelly not only sees humanitarian efforts as a whitespace opportunity to exploit, they are a personal passion of hers. This shows it as an area that not only has good strategic relevance, but also fits with the cultural ethos of the city. Which is exactly what cities should be looking for.

Emphasis added. This story is familiar to me. Return migration is revitalizing the Rust Belt. Why is this return migration happening? Because in Big City Chicago or even New York you "couldn't have had this success and certainly not this quickly." In NYC, Kelly Campbell is a cog in the fashion industry. In Indianapolis, Kelly Campbell is transforming an entire city. New York can afford to shrug. For Chicago, it is a signal of decline. Ms. Campbell in the United States and Ms. Dagli in Turkey are on the same path.

Tuesday, May 08, 2012

Tech companies are making strategic location decisions based on access to talent. The office rental market makes for a handy map for the US Talent Economy. Where the tech talent is:

As GlobeSt.com previously reported, San Francisco was found to be a top-performing office market in first-quarter 2012—followed by New York City and Houston—with rental rates increasing by 7.5% over fourth-quarter 2011. Demand and rent growth here were found to be driven largely by technology growth—specifically, social media, search engine and cloud computing companies such as Twitter, Zynga, Salesforce, Yelp, Google and LinkedIn, Yasukochi told GlobeSt.com at the time.

Submarkets that saw positive annual rent growth during the first quarter include Vancouver’s Yaletown submarket; Boulder, CO; downtown Pittsburgh; Washington, D.C.’s East End; and the West Loop submarket of Houston, the report indicates. High-tech demand for office space, which has led to rent recovery in many markets adversely affected by the financial downturn, is now spurring construction activity in the office sector for the first time in more than five years.

“We’re now seeing strong evidence of the ‘high-tech effect’ spreading out beyond the five major markets as companies in the technology sector both expand their business models and engage in a vigorous battle to land new pools of talent,” Yasukochi says. “This quest for more human capital is increasingly pushing firms to look outside traditional tech cities to set up new operations.”

The submarket trend for tech talent is indicative of the larger move to geographic arbitrage opportunities. I imagine startups moving from New York City to Pittsburgh, instead of the other way around. Companies are moving to where the talent is produced. You can't bank on brain drain Pittsburgh any longer.

To be sure, the Chicago Tri-State metro-region remains an attractive place for many migrants, but it is less attractive than many of its US metro-region peers. Moreover, if the analysis is confined to highly educated people of prime working age (25+, with at least a bachelor’s degree), then the picture is even more problematic. During 2005-09, more such people moved into the area than left it, but the net gain was relatively small compared with other large US metro-regions. Los Angeles, for example, benefited from a net gain of nearly 80,000 highly educated people in 2009, compared with 3,500 for the Chicago Tri-State metro-region.

I added the links to the study referenced. Consider the OECD report another nudge for the Tech Belt (or whatever you call it) to move along more aggressively with integration. The corridor is a global exemplar. The effort is still in its infancy.

What are the benefits? For one, Pittsburgh's successful attraction of talent can spillover into Cleveland. Research universities in Southwestern PA can act as an economic development catalyst for Northeast Ohio. What Chicagoland could be, Cleveburgh is. Alone, Pittsburgh cannot rival Chicago. Together, the region can be a world class metro.

Saturday, May 05, 2012

Next, cities must work to keep that homegrown talent from flocking to cities such as New York, San Francisco or Boston. Students are an investment, and brain drain can ruin that investment. One suggestion from Hargreaves is to focus on training people in their 30s and 40s to become coders. They, says Hargreaves, are more likely to have laid down geographic roots, and therefore less likely to move away.

“When I was in New Haven, I worked with Yale and they were trying to build out a tech ecosystem in New Haven,” Hargreaves told Mashable. “They’d train these college aged kids that would go off and work in New York or Boston. One of the ways around that is by training people a little more locked-in to the geography.”

I'll give Hargreaves some points for focusing on a less geographically mobile demographic. Unfortunately, training will make any person a little less locked-in to the geography. Bummer.

A friend recently asked me to name the nation’s most-improved city. Without hesitation, I said, “Charlotte, North Carolina.”

Why Charlotte? There are other turnaround cities — Pittsburgh, Denver, Washington — to name a few. Each has recovered from urban decay and disinvestment. But Charlotte is different. It has recovered from fast growth, sprawl and suburbanization.

Software entrepreneur Peter Barth and his wife were planning to move to Charlotte from south Florida when they dropped by downtown Greenville for the first time on the way to see his uncle.

After strolling down Main Street and into Falls Park, they changed their minds on the spot and decided to move to Greenville instead.

“By the time we made it to the bottom of the falls, it was obvious that this is where we both wanted to be,” Barth recalled. ...

... Barth’s story and those of other newcomers suggest that Greenville’s downtown – three decades into a revitalization program – has begun to do more than boost the quality of life for natives and transplants already here.

Downtown is also serving as a magnet to draw outsiders who can do good things for the local economy – company owners who can relocate business here and talented executives that local firms need to prosper.

As Pittsburgh and Greenville can tell Charlotte, turnarounds take a long time. Why wait for a cool city to flower when an undiscovered gem is available now? Talent migration has already answered this question and industry/capital will follow:

Bill Bradfield liked downtown Greenville so much, he brought his company here.

The former Bell Atlantic executive founded Perceptis Inc. in Cleveland eight years ago to provide help desk and customer support services to colleges and universities.

When he decided to build a new headquarters and call center, he considered putting them in Charlottesville.

He also scouted Greenville and Charleston after Frontier Capital, a Charlotte venture capital firm that had invested in Perceptis, urged him to consider sites in South Carolina.

He spent his first day in Greenville looking at real estate with a group of business recruiters led by Hal Johnson, president of the Upstate SC Alliance economic development organization. ...

... Bradfield said they were all surprised to find downtown so cosmopolitan, and the favorable impression helped seal the deal for Greenville.

Since then, he’s put about 100 workers in the new Perceptis headquarters and call center in the First Citizens Building on West McBee Avenue.

Bradfield, who grew up in Philadelphia and lived in Los Angeles and other big cities, said one of the nice things about a big city is “there’s always art, there’s always good restaurants, and all of that was (in Greenville) with a decidedly more genteel flavor to it.”

The US urban renaissance is about having big city amenities at a fraction of the cost. That favors metros with substantial legacy assets. (See Buffalo) As real estate refugees flee New York City, they will choose Greenville over Charlotte. The ULI should have showcased the former instead of the latter.

Yakini gives voice to a hard-to-ignore fact: In a city that’s 83 percent African American, many (though not all) of the young movers and shakers who have drawn so much media attention are white. The press has labeled these newcomers “hipsters,” with all the connotations of irony and retro fashion. But what strikes me, when I meet some of these young leaders, is how similar they sound to the longtime Detroiters who are working to jump-start their neighborhoods.

One morning at Motor City Java House, I’m introduced to a 30-year-old visual artist named Amy Kaherl, who is part of that fast-growing demographic. Kaherl runs Detroit SOUP, an organization that gives “micro-grants” of up to $1,000 for projects benefiting the city. It hosts monthly dinners: Five dollars buys soup, salad, pie, and a vote. Entrepreneurs present their ideas, and the winner of a secret ballot takes home the evening’s proceeds. SOUP has funded everything from a community radio station to an enterprise involving winter coats that double as sleeping bags, produced by (and distributed free to) homeless Detroiters. She has come to the Java House today to discuss the possibility of a SOUP dinner in Brightmoor.

Kaherl grew up north of the city, in a suburb called Sterling Heights. She moved to Los Angeles to earn a master’s degree in theology with an emphasis on pop culture. She moved back to Michigan when her mother died in 2008 and marveled at how easily Detroiters welcomed her into their cultural scene. “The ego of when you go to some big cities—‘I’m very important; you should know me’—that feeling didn’t seem to exist,” she says. The poverty here is just too wrenching, and the need for all hands on deck too great, for L.A.–style climbers to get any traction. “This city, man, you’ve got to leave your ego at the door. If it’s about you getting famous, or you moving ahead, then you’ve picked the wrong city because you will be sniffed out within moments.”

Emphasis added. After reading "Detroit: A Biography", I'm sensitive to the critique. Fact is, white suburban brats are moving back into the city. We're seeing the same pattern in one Rust Belt city after another. Prodigal daughter leaves the bucolic outer ring for a global hub, eventually returning to a unique cosmopolitan existence. This migration is, indeed, ironic.

This migration is going unnoticed because NYC, LA, and Chicago are acting as talent way stations. Cutting out the middleman, the suburbs are pouring back into the city. For Detroit, the change is a cataclysm. White flight has come to define the metro. What we have now is black flight, the reverse of the Great Migration. The trend is national. Everyone is doing the boomerang.

Rust Belt refugees are rediscovering their culture and urban roots. Your grandmother used to live in the City of Detroit. She got out so you could live a better life. That better life now can be found in the neighborhood she escaped. That's why you left New York.

Thursday, May 03, 2012

THINK of this city in the 1970s, and the picture that springs to mind is of a dying industrial metropolis. Once called the City of Light because of its abundant hydroelectric power (courtesy of Niagara Falls), Buffalo was a manufacturing and rail hub for much of the 20th century. But by the ’70s, as its mills and foundries closed, it was gradually becoming a symbol of urban blight.

During that decade Buffalo also boasted a thriving avant-garde arts scene, rich enough to nurture Pictures-generation artists like Cindy Sherman and Robert Longo, to attract visiting video and film artists like Bill Viola and Stan Brakhage, and to encourage large-scale land art by Martin Puryear, Nancy Holt and others. How and why this scene came about is the subject of the survey show “Wish You Were Here: The Buffalo Avant-Garde in the 1970s,” at the Albright-Knox museum here through July 8.

Thanks to Richard Florida, we have a strange idea what makes a creative city. It should be cosmopolitan (i.e. "tolerant") like New York. The economy is thriving with tech and talent. It's a story of success, not a backwater dump abandoned by history and punished by globalization. Buffalo was Paris:

For the area’s artists, it was the perfect combination, said the photographer Ellen Carey, who moved here in 1975 for an M.F.A. at the State University at Buffalo. “I didn’t think of Buffalo as crumbling or falling down,” she said. “I just thought it was great. It was rough in the 1930s in Paris too.”

What makes Buffalo special are the legacy assets and the proximity to NYC. Buffalo also demonstrates the limits of the creative economy. If you can't get on the mental maps of RISD graduates, then you are screwed. Those wonderful bones only go so far. But the proximity advantage remains unappreciated:

“I could have been in New York City, but it was almost the same thing to be in Buffalo,” said Mr. Conrad, who joined the faculty in 1976 and remains there. “In fact there were things that were better, because of the funding resources, and the animated spirit of the young people in our program and other places in the city.” Bill Viola, who also visited frequently in the 1970s, agreed. “Everybody managed to go through Buffalo,” he said. “It was kind of the mecca.”

Brown defends his desire to raise taxes and increase spending in Memphis by saying it's "a myth" that residents are leaving Memphis. But he need only look at the mayor's budget document, which says the city has suffered "years of population decline." And numbers from the Census Bureau show a more detailed story of the steady out-migration. It has been masked by annexations and yearly births outnumbering deaths, but it's a very real trend.

The issue is taxes. The higher they go, the greater the exodus. The folks at The Commercial Appeal get an "Epic Fail" for completely overlooking the controversy. Of course people are leaving the city. That's the case everywhere. People are also moving into the City of Memphis. I guess they like higher taxes.

From where I sit, Jim Strickland has his Pants on Fire. Net outmigration is not proof that people vote with their tail lights. I don't know what Joe Brown meant by his statement. I recognize Strickland's gambit. Too bad an intrepid newspaper reporter couldn't tease that out.

The Greater Nashua Chamber of Commerce, for example, has held discussion sessions about a shortage of young adult workers, compared to the older group of workers nearing retirement. New Hampshire has launched an entire program called Stay Work Play designed to lure and retain college graduates.

Johnson has long argued that most of this shortage is not the result of young adults leaving New Hampshire after graduating from college, but is a reflection of relatively low birth rates by the post-World War II population explosion known as the baby boom, particularly for the white non-Hispanics who make up the majority of the state’s population.

Stay Work Play feeds into the perception that talent is leaving New Hampshire in droves. Anecdotes abound. Those numbers? Don't believe them.

The program is bunk, a boondoggle. It isn't free. Somebody, usually taxpayers, is footing the bill to fix a problem that doesn't exist. The no-so-dirty-little-secret is that business is trying to outsource talent acquisition. From subsidized student loans to the Pittsburgh Promise, the public is stuck with workforce development. The costs of attrition and training are externalized. If you could stop the brain drain, then the result would be a captive labor market that will depress wages. This makes moving more attractive. Stay Work Play is economic undevelopment.